No More Big Squeeze
In the past, when a publisher squeezed their printer on pricing, the onus was on the printer to cover their fixed costs with greater plant utilization (as the manufacturer's margin shrinks, plant productivity should, ideally, increase to compensate).
Now with recession-era economics still squeezing publishers and printers, the pressure is on both parties to work together and find efficiencies. "We work to create joint teams to attack the costs of raw material and labor," Mitchell says. "The ideal situation is that we get to a lower price, and help the printer secure net income and assets."
Last year was 'challenging' for most book manufacturers, a euphemism for 'lousy'. The recession sucked the life out of nearly all manufacturing sectors in 2001 and 2002; book manufacturing was no exception.
The Book Industry Study Group (BISG) projects domestic publishers' 2003 net sales will, in the final analysis, hit $27 billion, up only 2.7% over 2002. For 2004, BISG estimates a modest 3.4% increase in publishers' net sales, to about $28 billion.
Categorically, trade, mass-market, and professional sectors will average increases in the 2.3% to 2.5% range for 2004, BISG researchers predict. El-hi will be up 3.6%, hitting $4.3 billion, while college sales will increase by 8.3%, to roughly $4.6 billion.
TRADE HIT HARDEST
"We've seen some good progress in the school division, with growth of 4% percent for the grade school and secondary school markets," says Jacques Gregoire, VP for the books group at Transcontinental Printing Inc., in Montreal. "The hardest hit is trade," Gregoire says, as the largest booksellers burn through inventory without reordering, in response to an anticipated sales increase that failed to materialize.
The first half of 2003 was "slow for trades, better for education," says Ed Lane, president of the book group at R.R. Donnelley & Sons Inc., Chicago. Next year Lane projects a reduction in el-hi sales, as school districts are finished with textbook selection and replacement. But the trade business, Lane says, should pick up. Overall, 2004 "will be challenging, but 2005 and 2006 will see a more robust recovery," Lane says.